What to do with recovered loot

Corruption is the greatest tragedy and main obstacle to the stability and development of Nigeria. The many faces of corruption and the various ways it affects and impacts on the socio-economic and political systems of the country are too glaring and have been well documented and need not be regurgitated here.

Annual cross-border flow of proceeds of crime is estimated at US$1-1.6 trillion. Half of this is from Less Developed or Developing Countries (LDCs), out of which $20-40 billion is from bribes to public officials in LDCs. Nigeria’s share is the highest due to the prevalence of corruption. In 2014, the African Union High level Panel on Illicit Financial Flows estimated that about $60 billion has been illegally transferred out of Africa – $40 billion from Nigeria. President Muhammadu Buhari, in his speech at the 70th United Nations General Assembly in 2015 stated that $150 billion was looted from the government treasury in Nigeria between 1995 and 2015. Other estimates suggest that $182 billion was stolen from Nigeria and stashed offshore between 2000 and 2009. Investigations into arms procurement for the military under the Office of National Security Adviser revealed that $2.1 billion was shared among politicians leaving the citizens at the mercy of the Boko Haram insurgency. In all, more than $500 billion has been lost to graft in Nigeria since independence.

The greatest expectation on President Buhari was and still remains in the ability of his government to stem the tide of the monster called ‘corruption’. Consequently, asset recovery is a priority on the anti-corruption agenda of the Buhari administration. This has been appropriately articulated in the National Anti-Corruption Strategy 2017. Illicitly obtained funds are usually invested abroad either because domestic currency or economy is unstable; to avoid detection or simply to place the money outside the reach of a national government’s jurisdiction. Until recently, financial institutions in financial centres were accepting and would accept stolen money without question. This has now changed relatively due to the anti-money laundering standards being enforced the world over.

The principles behind the recovery of assets include the common understanding that it is an economic intervention strategy with potentials of bringing back what have been stolen or misappropriated, thus, increasing the revenue profile of the government; to that extent, it serves as a restitution to the society/citizens who have been ‘victimized’ by acts of corruption. Asset recovery also aims to deny criminals their illegal gain and to prevent them from misusing it for organized crime purposes. But most importantly, it is an anti-corruption strategy with potential of removing negative role models from society and rebutting the notion that crime pays.

The international response
The international community and governments have developed various tools for recovering the proceeds of crime. However, in spite of domestic legislation, which allows confiscation and forfeiture of the proceeds of crime, globalisation and technological advancement have allowed perpetrators of crime to continue to launder the illicit proceeds of their crimes. The subject of asset recovery has become one of the major themes in discourses on development funding, due in part to the enormous amount of resources that are lost annually by developing countries to corruption. Over the last couple of decades, the legal and criminological approach to dealing with criminal activities like drug trafficking, corruption, money laundering and terrorist financing have undergone a paradigm shift from the utilitarian and the traditional “just deserts” model of punishment to a “dispossession” model which aims at taking the profit out of crime. Recovering the proceeds of crime takes the profit out of the crime because it deprives perpetrators of their illicit gains. Asset forfeiture and asset recovery have thus, become some of the more innovative tools to combat economic and financial crimes.

The United Nations Convention against Corruption (UNCAC) is the ground breaking convention on asset recovery. The UNCAC explicitly identifies asset recovery as its fundamental principle. It enjoins States Parties to establish comprehensive domestic regulatory and supervisory regimes to prevent money laundering. Countries that have ratified the UNCAC are required to criminalize the offence of bribery, embezzlement, misappropriation or other diversion of property by a public official and, laundering of the proceeds of crime; however, criminalisation of illicit enrichment, is left to the discretion of the States.

Nevertheless, Article 21 of the UNCAC encourages States Parties to put in place measures that would criminalize illicit enrichment, which is defined as “a significant increase in the assets of a public official that he or she cannot reasonably explain in relation to his or her lawful income”. Applying the principles of Article 21 means that a significant increase in the assets of a public servant raises a prima facie presumption that the public official concerned benefited from illicit enrichment. This presumption can be rebutted by furnishing facts which reasonably explain the legal source of the assets. While several jurisdictions have successfully enacted and enforced illicit enrichment, others consider it inconsistent with their constitutions and fundamental principles of due process.

The greatest innovation of the Convention is contained in chapter five. Asset recovery and the return of such assets to countries of origin is a fundamental principle of this Convention, and this chapter contains provisions such as prevention and detection of transfers of proceeds of crime; measures for direct recovery of property; mechanisms for recovery of property through international cooperation in confiscation; international cooperation for the purposes of confiscation; return and disposal of assets; the requirement for the establishment of financial intelligence unit; as well as bilateral and multilateral agreements and arrangements (Articles 51–59). Specifically, Article 51 states: ‘The return of assets pursuant to this chapter is a fundamental principle of this Convention, and States Parties shall afford one another the widest measure of cooperation and assistance in this regard.’ And on matters of direct recovery of property, the Convention provides (Article 53) that
Shehu is a professor of Criminology, National Open University, Abuja.

Each State Party shall, in accordance with its domestic law:
(a) Take such measures as may be necessary to permit another State Party to initiate civil action in its courts to establish title to or ownership of property acquired through the commission of an offence established in accordance with this Convention;
(b) Take such measures as may be necessary to permit its courts to order those who have committed offences established in accordance with this Convention to pay compensation or damages to another State Party that has been harmed by such offences; and
(c) Take such measures as may be necessary to permit its courts or competent authorities, when having to decide on confiscation, to recognize another State Party’s claim as a legitimate owner of property acquired through the commission of an offence established in accordance with this Convention.

Despite these comprehensive international framework, recovering the proceeds of crime is premised on evidence; that is, the existence of assets. Thus, the spirit and letter in the international instruments is that in order to conduct a successful recovery of criminal proceeds, assets must be followed not only to their final hiding place, but causality must be established between the asset and the criminal activity. This process is complex, technical and time consuming; as such, it poses particular challenges for developing countries like Nigeria that is a cash-based society with low capacity. Stolen assets are often layered through different accounts and corporate vehicles; therefore, identifying and tracing illicit assets successfully require expertise, resources and cooperation between multiple intelligence and law enforcement agencies, as well as prosecutors. It is thus, crucial for the Financial Intelligence Unit (FIU), law enforcement agencies and prosecutors to cooperate and work together to build an iron clad case each and every time.

Recovery efforts by Nigeria
The existing legal and institutional framework for asset recovery in Nigeria is still evolving. Although the country has made provision for confiscation pursuant to a criminal conviction in the MLPA 2011 and the EFCC Act, based on the outcome of cases that have been handled by the EFCC, it can be argued that the institution has been effective in respect of fraud cases involving ordinary citizens but less so in respect of cases involving Politically Exposed Persons (PEPs). In other words, prosecutions and convictions are fewer in matters involving PEPs and many of these cases are being delayed while others have been struck out by the courts.

Nevertheless, within one year (from 29 May 2015 to 29 May 2016), following pressure from the public, the government announced the recovery of assets in cash totaling N78, 325, 354, 631.82 (Seventy eight billion, three hundred and twenty-five million, three hundred fifty-four thousand, six hundred and thirty-one naira and eighty-two kobo); $185, 119, 584.61 (One hundred and eighty-five million, one hundred and nineteen thousand, five hundred and eighty-four US dollars, sixty one cents); £3, 508, 355,.46 (Three million, five hundred and eight thousand, three hundred and fifty-five Pounds and forty-six pence); and €11, 250 (Eleven thousand, two hundred and fifty Euros).

The government also disclosed that recoveries under Interim Forfeiture (cash and assets) during the same period totaled N126, 563, 481, 095. 43 (One hundred and twenty six billion, five hundred and sixty-three million, four hundred and eighty-one thousand, and ninety-five naira, forty three kobo); $9, 090, 243, 920. 15 (Nine billion, ninety million, two hundred and forty-three thousand, nine hundred and twenty dollars, fifteen cents); £2, 484, 447,.55 (Two million, four hundred and eighty-four thousand, four hundred and forty-seven Pounds, fifty-five pence); and €303, 399.17 (Three hundred and three thousand, three hundred and ninety-nine Euros, 17 cents).

Following the introduction of the Whistle blowing Policy in December 2016, huge sums purported to be proceeds of corruption have been seized (I am not sure they have been recovered). These amounts include the sums of US$9.8m and £74,000 cash was seized in a building owned by former NNPC GMD; another $43m, £27, 000 and N23m cash recovered from a flat in Ikoyi; 47 Sport Utility Vehicles/buses allegedly bought for N1.5 billion proceeds of N27 billion insurance premiums of deceased workers of PHCN recovered. Thus, bringing a total estimated recoveries to $160 million. In June 2017, N375.8 million was released by the government for payment of 20 whistleblowers as reward for N11.6 billion recovery.

These figures do not represent the entire recoveries made. Following a suit by concerned citizens in 2017, a Federal High Court in Lagos ruled that government should make known recoveries made pursuant to its anti-corruption efforts but that has not been done. In December 2017, on the margins of the Global Forum on Asset Recovery held at the IFC Headquarters in Washington D.C. USA, the Attorney General of the Federation and Minister of Justice, Abubakar Malami, SAN, signed a Tripartite Agreement with the Government of Switzerland and the World Bank for repatriation of $321 million purported to be part of the Abacha loot. While commending the government for these recoveries, the most important question agitating most Nigerians now is what to do with the recovered proceeds.

How to manage the recovered loot
A recent statement in the news media attributed to the Vice President indicated that government intends to invest recovered proceeds on a ‘Social Protection Scheme’ which is one of the pet programmes of the Buhari administration. While no body, not even the other parties to any negotiated recovery, unsolicited should determine to government how to spend its resources, the Nigerian citizens, to whom these resources belong should be concerned and interested in how effective their commonwealth is utilized. And this is the main thrust, indeed raison de taire of this piece – to contribute to the debate on how best to apply the recovered assets.

It is obvious from public reactions and commentaries in the news media that majority of Nigerians do not believe that government is on the right direction based on experiences of the past. While the Social Protection Scheme of the government is a noble programme, it is doubtful how effective it can be if its funding would depend on recovered proceeds; the legal status of which may not be clear as to whether the National Assembly has to appropriate the recovered loot before government can apply to the scheme. There would be an issue as to whether such funds should/or not be deposited in the consolidated revenue account according to section 80 of the Constitution of the Federal Republic of Nigeria (1999), thus, the other tiers of government (states and local) would be entitled to it. Regardless of the legal technicalities surrounding the recovered proceeds, it is doubtful channeling proceeds of corruption in this way would make a difference from how previous recoveries were expended.

We may just refresh our memories to the Obasanjo administration, during which time government voluntarily or otherwise, involved the World Bank in the management of the amounts that were returned to Nigeria by Switzerland and other countries. The recoveries we expended on projects which no one can point out today. Was it applied into the National Poverty Eradication Programme or to the provision of medical services, roads or electricity? We stand to learn from that experience.

Similarly, during the investigation into the procurement of arms for the Armed Forces of Nigeria to fight Boko Haram, one of the pieces of evidence of corrupt use or misappropriation of part of the Abacha loot that came from the former Minister of Finance Dr. Ngozi Okonjo-Iweala was that the money was used by the Office of the National Security Adviser to procure arms. What more evidence do we need to confirm the doubt that the decision to invest the recovered funds in any social security scheme would justify the recovery/anti-corruption efforts?

In view of the foregoing I have always held the view that the fight against corruption must not only be comprehensive and integrated, but it must also be inclusive and impact-oriented. Thus, in my view, the recovered assets should be applied to specific, identifiable, measurable, realistic and impact-based projects. For example, it is possible to determine from the records in the Central Bank how these moneys were siphoned. If the money was siphoned under the guise of security, let the recovered moneys be spent on a specific project that can be seen by citizens to enhance the security of Nigeria; and if the guise was for education or road construction, it is even easier to justify the expenditure on such project and a signage inscribed on the project that it was built with proceeds of corruption. Although this is not easy, yet it can be done, and it can upscale public trust and confidence in the anti-corruption drive of the government.

Lessons Learned
There are several lessons learned in asset recovery worldwide and particularly in Nigeria. First, a strong political will is the main driver of the process. However, governments that succeed corrupt ones have to establish strong political legitimacy before they can galvanize the good will and support of their citizenry and the international community in the recovery of proceeds of corruption. In this regard, political will must be translated into concrete actions. Because a government prioritizes asset recovery does not mean that it cannot turn out to be corrupt. Efforts must be made to deal with reported cases of malfeasance in a transparent and harsh manner as possible to send credible deterrence to potential corruptors.

Secondly, the most effective strategy for asset recovery is to prevent the theft of the assets in the first instance. This is what is contemplated in the Preventive Chapter of the United Nations Convention against Corruption (2003). The adage that ‘prevention is better than cure’ sums it all. Thus, the fight against corruption should be institutionalized by strengthening the relevant agencies to perform their functions professionally. The issue is how do we stop further diversion of resources? All the codes of ethics and conduct, monitoring and accountability mechanisms must be strengthened. The ability to stop corruption from occurring in the first place would save public assets and the cost of investigating and prosecuting offenders, as well as recovering such assets. This requires transparent leadership by example. When the fight against corruption is perceived as vindictive, selective or ‘witch-hunting’, that can be counter-productive to the recovery of assets.

Thirdly, recovering the proceeds of crime is premised on evidence; that is, the existence of assets. Thus, in order to conduct a successful recovery of criminal proceeds, assets must be followed not only to their final hiding place, but causality must be established between the asset and the criminal activity (not in respect of non-conviction based recovery). That means the quality and timeliness of investigation and prosecution would determine the outcome of adjudication and final judgment.

Fourthly, asset management is an important aspect of recovering the proceeds of crime because it ensures that assets, once recovered do not get stolen again by yet another group of kleptocrats. It is thus important to establish a legal framework for managing and utilizing the funds for development purposes. It is hard to see how Nigeria’s efforts can yield the desired results when Nigeria has not enacted a mutual legal assistance law several years when the bill was sent to the NASS. A governance “premium” may be established to manage recovered funds and reinvest wisely to show to the public that corruption does not pay and that anti-corruption is working.

Fifthly, there is need for confidentiality of the process at certain stages. Nevertheless, asset recovery should be inclusive and transparent. In this regard, it is important to carry the citizens along. The public should be informed regarding the progress not only to make it transparent, but also to galvanize public support.

Sixthly, domestic coordination is an important element in asset recovery. In Nigeria, it is not clear who is actually responsible for this function. While the Attorney General has the powers by law, it seems that cooperation and coordination with other competent authorities needs to be strengthened. Lastly, of course those jurisdictions where corrupt proceeds are located have some blame; but each country has to develop a home-grown solution to convince the international community of its seriousness and why they should assist it in the recovery and return of stolen assets.
Shehu is a professor of Criminology, National Open University, Abuja.